Watson Pharmaceuticals buys generic drug developer Specifar

Watson Pharmaceuticals expands its presence in Europe by acquiring Specifar Pharmaceuticals, a privately held firm in Greece, for $562 million in cash.

Watson Pharmaceuticals Inc. has acquired privately held generic drug developer Specifar Pharmaceuticals for $562 million in cash to expand its presence in Europe.

The deal for the Greek company broadens Watson's generic drug sales in Europe after the Corona company established a foothold in the region with its 2009 acquisition of Arrow Group.

"It provides us with additional commercial capacity for our European businesses," Watson Chief Executive Paul Bisaro said. "We got the beachhead established, but now we needed the firepower to go out and expand that beachhead, and that's what this does."

Although government pricing pressures have hurt European businesses of some drug makers, companies see opportunities because penetration rates for generics are often far lower than in the U.S. pharmaceutical market.

"There's still a lot of growth here in these markets," Bisaro said.

Specifar, which has about $120 million in annual sales, is a third-party product developer, with some 400 marketing authorizations licensed to third parties for sale in 36 countries, including France, Germany, Poland, Italy and Spain.

Watson had revenue of nearly $3.6 billion last year.

JP Morgan analyst Chris Schott said Watson's current European business, gained from the Arrow deal, primarily has operated in France and Britain.

"Watson has a relatively small footprint in the European market, and we believe Specifar provides the company with a solid base to significantly expand," Schott said in a research note.